The following points highlight the top five theories of equity. The theories are: 1. Proprietary Theory 2. Entity Theory 3. Fund Theory 4. Residual Equity Theory 5. Enterprise Theory. 1. Proprietary Theory: Under the proprietary theory, the entity is the agent, representative, or arrangement through which the individual entrepreneurs or shareholders operate. In this theory, the viewpoint of the owners [...]
This article throws light upon the top four theories of capital structure. The theories are: 1. Net Income Approach 2. Net Operating Income Approach 3. Traditional Approach 4. Modigliani-Miller Approach. Theory # 1. Net Income (NI) Approach: David Durand' suggested the two famous capital structure theories, viz, Net Income Approach and the Operating Income Approach: According to NI approach a [...]
This article throws light upon the top three theories of dividend policy. The theories are: 1. Modigliani-Miller (M-M) Hypothesis 2. Walter's Model 3. Gordon's Model. Theory # 1. Modigliani-Miller (M-M) Hypothesis: Modigliani-Miller hypothesis provides the irrelevance concept of dividend in a comprehensive manner. According to them, the dividend policy of a firm is irrelevant since, it does not have any [...]